Will Tata Sons, Singapore Airlines fly high in Indian skies?

Being a full-service carrier in a market dominated by low-cost carriers Tata-SIA will make it a long haul. (Reuters)

SummaryBoth Tata and Singapore Airlines names will add to the airline's appeal, but competition is fierce.

Both the Tata Sons and the Singapore Airlines names will add to the airline’s appeal, but the competition is fierce and being a full-service carrier in a market dominated by low-cost carriers will make it a long haul

The Tata Sons, Singapore Airlines JV reaffirms the long-term potential of the Indian civil aviation and tourism industry. Both seem beset today with man-made problems like excessive taxation, poor infrastructure and cumbersome procedures. All these are likely to change as policy-making in India matures. The presence of Tata Sons, Singapore Airlines will speed that up. It will also give a boost to other leading global airlines currently engaged in conversation with prospective Indian partners.

The exit of Kingfisher Airlines created a void in the full service carrier (FSC) space. India now has only two full service domestic airlines—Air India (AI) and Jet Airways. The Tata Sons and Singapore Airlines JV will enhance options for passengers. The difference in fares on FSC and low cost carriers (LCC) is negligible. With the duration of most domestic flights being around 2 hours, the perceived luxury is for a very short duration. Both Jet and AI are relooking their business:economy seat configuration. Tata Sons and Singapore Airlines will therefore compete with both FSCs and LCCs and it’s all good for the Indian passenger who will now be wooed like never before.

But perhaps the biggest gain to India will be on the international sector. International traffic in and out of India, unlike domestic, has grown every year in the past decade, even during the economic slowdown. Nearly 70% of global traffic from India is West-bound, to the Middle East, Africa, EU and the Americas. Singapore Airlines biggest strength lies in inter-continental long-haul flights. Tata Sons and Singapore Airlines would compete on those routes on the Indian share of the bilateral quota. It may also examine the option of direct flights to the Far East and Australia from India. The competition on the West-bound routes will again improve services and bring down fares. That will help India attract more inbound tourists who otherwise head to locations like Thailand, Malaysia, Cambodia, etc.